Trading  With  China 


Guaranty  Trust  Company 
of  New  York 


Trading  With  China 


Digitized  by  the  Internet  Archive 
in  2017  with  funding  from 
Columbia  University  Libraries 


https://archive.org/details/tradingwithchinaOOguar 


Trading  With  China 


Methods  Found  Successful  in 
Dealing  With  the  Chinese 


Guaranty  Trust  Company  of  New  York 

140  Broadway 


FIFTH  AVENUE  OFFICE 
Fifth  Avenue  and  43rd  Street 

MADISON  AVENUE  OFFICE 
Madison  Avenue  and  60th  Street 


L ONDON  OFFICES 
32  Lombard  Street,  E,  C. 
5 Lower  Grosvenor  PL,  S.W. 

PARIS  OFFICE 
Rue  des  Italiens,  1 and  3 


Copyright,  1919,  by  Guaranty  Trust  Company  of  New  York 


Interior  of  the  Shanghai  Office  of  the  Asia  Banking  Corporation 


Trading  With  China 

Methods  Found  Successful  in  Dealing  With  the  Chinese 


Many  regard  China  as  a far-distant  land,  with 
an  immense  population,  but  so  wanting  in  all  that 
others  possess  as  to  be  ready  to  purchase,  in  un- 
limited quantities,  whatever  is  offered  for  sale; 
whereas  what  is  true  is  this : China  needs  neither 
import  nor  export,  and  can  do  without  foreign  in- 
tercourse. A fertile  soil,  producing  every  kind  of 
food,  a climate  which  favors  every  variety  of 
fruit,  and  a population  which  for  tens  of  centuries 
has  put  agriculture — the  productive  industry 
which  feeds  and  clothes — above  all  other  occu- 
pations, China  has  all  these  and  more,  and  foreign 
traders  can  only  hope  to  dispose  of  their  merchandise 
in  proportion  to  the  new  tastes  they  introduce,  the 
new  wants  they  create,  and  the  care  they  take  to  sup- 
ply the  demand. 

Thus  sir  Robert  Hart,  Inspector- 
General  of  Chinese  Imperial  Customs 
and  Posts — a man  intimately  acquainted 
with  the  Chinese — summed  up  the  foreign 
trade  situation  in  China  in  1901,  and  al- 
though eighteen  years  have  passed  by,  the 
words  are  as  true  today  as  they  were  then. 
The  fact  that  in  the  twelve  months  end- 
ing December,  1918,  the  exports  to  China 
of  American  merchandise  amounted  to 
$59,134,960,  and  the  imports  from  China 
to  this  eountry  totalled  $140,892,573,  only 
serves  to  emphasize  the  truth  of  his  state- 
ment, for  success  in  trading  with  China 
has  come  only  to  those  who  have  made  a 
careful  study  of  the  characteristics  and 
wants  of  the  400,000,000  frugal,  indus- 
trious inhabitants  of  that  vast  country. 
And  our  imports  from  China  are  still  far 
in  excess  of  our  exports  to  China. 

Nevertheless,  the  foreign  trade  of  China 
now  amounts  to  much  more  than  a billion 
gold-dollars  a year.  This  indicates  an  ad- 
vance of  more  than  one  hundred  per  cent, 
in  the  last  ten  years,  if  figured  in  gold 


dollars,  while  in  Chinese  taels  it  has  ad- 
vanced about  thirty-three  per  cent. 

With  an  area  of  about  4,300,000  square 
miles,  one  and  a half  times  the  area  of  the 
United  States,  excluding  Alaska  and  our 
outlying  possessions,  with  about  93  per- 
sons to  the  square  mile,  with  only  about 

6.000  miles  of  railways  compared  with  our 

260.000  miles,  and  with  one-half  of  the 
population  without  wheeled  vehicles, 
China  is  today  at  the  inception  of  a vast 
modern  industrial  development,  and  will 
require  railway  materials,  mining  equip- 
ment, electrical  plants,  public  utilities, 
machinery  and  factory  equipment,  and 
metal  products  in  great  abundance. 
American  ships,  American  capital,  Ameri- 
can organizations  must  be  provided  for 
the  expansion  of  American  trade  in  China. 

Vast  Field  for  Americans 

It  is  a vast  field  of  opportunity  that 
has  hardly  been  scratched — a field  that 
will  yield  a rich  harvest  to  the  American 
who  cultivates  it  with  intelligence  and 
understanding,  because  the  position  of 
the  United  States  in  China  is  peculiarly 
advantageous.  China  regards  our  coun- 
try as  friendly  in  the  desire  to  protect 
rather  than  despoil  her  territory.  But  to 
meet  competition  we  must  have  a pow^er- 
ful  organization,  a base  and  rallying  point, 
a tangible  something  besides  mere  labels 
on  boxes  or  bales  as  representing  Ameri- 
can force.  It  must  be  remembered  that 
the  Chinaman  makes  his  judgment  largely 
on  the  outward,  visible  signs,  and  that 
he  has  a natural  tendency  to  deal  with  the 
strongest  firm. 


[5 


America’s  manufacturing  capacity  to- 
day, as  a result  of  war-time  expansion  and 
increased  efficiency  in  production,  is  so 
large  that  the  outi)ut  of  our  plants  at  full 
time  is  much  greater  than  America’s 
markets  can  continuously  and  regularly 
absorb,  and  if  we  are  to  avoid  periods  of 
unemjrloyment  of  large  bodies  of  workers 
we  must  get  our  share  of  foreign  trade  to 
dispose  of  this  surplus  production.  The 
Chinese  market  will  be  a great  factor  in 
solving  this  problem.  This  booklet  has, 
therefore,  been  prepared  to  guide  those 
unversed  in  Chinese  commerce. 

Governing  Elements 
Three  basic  elements  govern  Chinese 
business  — personality,  education,  and 
honesty.  Regarding  the  first,  your  repre- 
sentative in  China  must  be  a man  of  edu- 
cation and  tact.  The  quality  of  aggres- 
siA’eness  which  makes  for  success  in  the 
United  States  must  be  toned  down  in  deal- 
ings with  the  Chinese,  a dignified  race  that 
abhor,  the  breeziness  of  a certain  type  of 


salesmen.  On  the  other  hand  they  have  a 
profound  reverence  for  a man  of  learning, 
and,  if  he  is  familiar  with  their  customs, 
business  relations  will  proceed  smoothly 
and  profitably. 

An  outstanding  feature  of  the  Chinese 
character  is  his  commercial  honor,  and  he 
demands  an  equally  high  standard  from 
the  foreigner.  One  deviation  from  abso- 
lute integrity  on  the  part  of  your  repre- 
sentative would  probably  destroy  your 
business  in  China.  The  Chinese  merchant 
is  noted  for  liberality  in  all  his  dealings,  is 
tenacious  as  to  all  that  is  material,  with 
comparative  disregard  for  trifles,  never 
letting  a transaction  fall  through  on  ac- 
count of  punctilio,  yielding  to  the  preju- 
dices of  others  wherever  it  can  be  done 
without  material  disadvantage.  Judicial 
procedure  being  an  abomination  to  re- 
spectable Chinese,  their  security  in  com- 
mercial dealings  is  based  as  much  upon 
reason,  good  faith,  and  non-repudiation 
as  is  that  of  western  nations  upon  verbal 
finesse  in  the  construction  of  contracts. 


Copyrighted  by  Newm.an  Traveltalks  ami  Brown  & Dawson,  N.  Y. 

One  of  the  niain  business  streets  in  Shanghai 


6] 


Copyr!"hte<l  by  Xewman  Traveltalks  and  Brown  & Dawson,  N.  Y. 

The  Bund  at  Shanghai 


Copyrighted  by  Underwood  & Underwood,  N.  Y. 


The  French  Quarter,  Shanghai 


[7 


Copyrighted  by  E.  M.  Newman 

The  Garden  Bridge,  a new  steel  structure,  in  Shanghai 


Your  representatives  should  be  required 
to  study  Chinese,  and  their  progress 
shoidd  be  tested  by  bi-weekly  oral  exam- 
inations and  monthly  written  tests.  Those 
showing  aptitude  should  be  encouraged  to 
higher  Chinese  studies  and,  as  an  incen- 
tive to  all,  a bonus  might  be  given  those 
who,  by  test  examination,  show  that  they 
have  attained  a fixed  standard.  The 
bonus  given  by  some  British  firms  some- 
times amounts  to  $500. 

The  success  of  Europeans  learning  the 
language  can  perhaps  best  be  judged  by 
the  statements  of  the  Shanghai  manager 
of  the  British- American  Tobacco  Com- 
pany. According  to  this  statement  the 
comjiany  has  no  fewer  than  sixty  men  re- 
siding in  the  interior  studying  Mandarin. 
In  N orth  China  especially  the  European 
travelers  of  this  firm  who  are  equipped 
with  a working  knowledge  of  Chinese  may 
be  encountered  in  the  most-out-of-the- 
way  ])laces,  j)ushing  the  business  of  the 
firm  in  a way  that  would  be  impossible 
without  their  knowledge  of  the  language. 
So  useful  has  knowledge  of  the  Chinese 
language  proved  to  be  in  the  company’s 
business  that  it  stipulates  in  its  contract 
when  engaging  assistants  in  England  or 
8] 


America  that  the  man  shall  be  required 
within  the  first  four  years  of  service  in 
China  to  learn  the  language  sufficiently 
well  to  be  able  to  transact  business  with- 
out the  assistance  of  an  interpreter. 

The  Compradore 

While  personal  contact  with  the  Chi- 
nese by  your  representative  in  the  field 
should  be  encouraged  and  facilitated  in 
every  possible  manner,  and  the  study  of 
the  language  insisted  upon  in  the  case  of  per- 
manent resident  representatives,  the  most 
important  factor  of  your  Chinese  business 
will  be  the  compradore.  There  is  no  more 
remarkable  figure  in  the  history  of  com- 
merce than  the  compradore  of  China,  who 
discharges  duties  of  large  trust  with  al- 
most uniform  fidelity.  In  the  early  days 
of  European  trade  with  China  the  com- 
pradore was  somewhat  of  a combined  in- 
terpreter and  steward,  to  whom  was  com- 
mitted the  business  of  bargaining  with  the 
natives  on  small  matters,  but  by  degrees 
the  compradore  has  grown  in  influence 
until  now  he  is  practically  indispensable. 

Determination  of  a purchaser’s  credit 
is,  in  China,  well-nigh  an  impossible  task 
to  a foreigner.  Of  course,  prominent, 
active,  and  honest  Chinese  firms  in  the 


Treaty  Ports  have  a standing  and  credit 
known  to  all;  but  when  the  prospective 
customer  hails  from  the  interior,  as  is  of- 
ten the  case,  the  fixing  of  his  reliability  is 
beyond  the  power  of  the  ordinary  foreign 
trader.  Because  of  this  situation  the  com- 
pradore  exists  in  all  foreign  firms  in  China. 

A Native  Credit  Man 

Briefly,  the  compradore  is  the  Chinese 
manager  and  credit  man  of  the  firm  with 
which  he  is  connected  and  the  guarantor 
of  all  native  accounts.  Any  order  for  goods 
countersigned  by  him  is  honored  at  once, 
as  such  countersignature  renders  him  re- 
sponsible for  payment  on  the  due  date 
— if  the  purchaser  fails  to  pay,  the  com- 
pradore must  satisfy  the  account. 

Compradores  invariably  furnish  cash 
guarantees — the  amount  dependent  upon 
the  firm’s  turnover — which,  as  a rule,  are 
placed  as  fixed  deposits,  drawing  interest. 


in  one  of  the  fere  gn  banks.  The  account 
is  technically  to  be  drawn  upon  by  the 
firm  if  the  compradore  refuses  to  pay  any 
account  countersigned  by  him  on  which  a 
purchaser  defaults.  It  is  almost  unheard 
of  to  draw  against  it — the  compradore 
meets  any  calls  from  his  own  funds.  In 
addition  to  cash,  the  compradore  furn- 
ishes a bond,  drawn  by  well-known  and 
wealthy  Chinese,  guaranteeing  the  firm 
against  loss.  Even  with  the.se  guarantees, 
careful  investigations  of  the  man’s  family 
connections  and  standing  among  the  Chi- 
nese merchants  are  made  before  he  is 
taken  on  as  coinjiradore.  A man  well 
known  to  the  local  Chinese  and  of  an  old 
merchant  family  will  fairly  gather  up  bus- 
iness for  his  firm.  Members  of  old  official 
families,  even  though  very  wealthy,  make 
poor  compradores,  as  some  firms  have  dis- 
covered, much  to  their  disadvantage. 
They  have  no  intimacy  with  the  Chinese 


Copyrighted  by  Newman  Traveltalks  and  Brown  & Paw.son,  N.  Y. 


A street  in  the  native  city,  Shanghai 


[9 


Cojiyrighted  by  Xewman  Traveltalks  and  Brown  & Dawson,  N.  Y. 


The  Band  and  Government  Buildings  at  Hong  Kong 


merchants,  are  not  in  sympathy  with 
them,  are  ignorant  of  their  methods  of 
working,  and  rarely  get  any  general  busi- 
ness— though  sometimes  they  capture 
Government  contracts. 

His  Work  Necessary 

In  a business  functioning  purely  on  a 
cash  basis,  the  compradore,  theoretically, 
is  unnecessary.  But  if  close  investigations 
should  be  made,  it  would  be  discovered 
that  the  head  clerk  or  other  employee  was, 
in  reality",  acting  as  a compradore,  but 
furnishing  cash  to  the  purchaser  instead 
of  indorsing  his  account.  Of  course,  for 
such  advances  a commission  is  exacted; 
the  compradore  does  likewise,  though  se- 
cretly, for  countersigning  orders.  From 
the  firm  itself  the  compradore  receives  a 
commission  of  3^  per  cent.,  more  or  less, 
on  all  orders  he  certifies. 

The  compradore  in  some  cases  receive,® 
from  the  firm  a fixed  salary,  for  which  he 
agrees  to  supply  a Chinese  staff,  which 
includes  a customs  clerk,  an  accountant, 
an  office  boy,  and  a few  coolies. 

Much  publicity  has  been  given  in  the 
newspapers  to  articles  on  China  in  which 
the  compradore  system  has  been  con- 
demned as  erecting  and  maintaining  a 
10] 


barrier  between  the  Chinese  and  foreign 
merchants.  The  barrier  undoubtedly  ex- 
ists. But  the  compradore  system  did  not 
bring  it  into  being,  nor  is  this  system  re- 
sponsible for  its  continued  existence.  The 
responsibility  lies  solely  on  the  shoulders 
of  the  inexperienced  foreigner.  He  has 
neither  exerted  himself  to  learn  Chinese 
nor  has  he  endeavored  to  enter  into  the 
life  of  the  natives.  Of  necessity,  the  for- 
eigner being  ignorant  of  Chinese  and  the 
native  knowing  no  English,  a go-between 
was,  and  still  is,  essential.  This  go-be- 
tween, the  compradore,  will  exist  so  long 
as  the  foreigner  speaks  no  Chinese,  and 
until  investigation  of  a Chinaman’s  credit 
is  feasible.  It  seems  fitting  to  mention 
here,  in  passing,  that  much  of  the  phe- 
nomenal advanee  of  German  trade  in  China 
was  due  to  the  persistence  with  which 
German  merchants  accommodated  them- 
■selves  to  Chinese  life,  and  their  farsight- 
edness in  equipiiing  their  employees  to 
carry  on  business  through  the  medium  of 
the  Chinese  language. 

Preparing  the  Campaign 
Handing  over  the  sale  of  one’s  products 
to  an  established  firm  is  often  unsatisfac- 
tory, especially  so  if  the  rights  are  en- 


Harbor  of  Hong  Kong 


Copyri;:hted  by  E.  M.  Newman 

Street  in  Hong  Kong 


[11 


Native  Shops  in  Peking 


trusted  to  a firm  of  nationality  other  than 
r)ne’s  own.  Tliere  is  always  danger  that  the 
market  of  similar  goods  from  the  factories 
of  the  agency  owner’s  jnother-country  will 
not  be  aggressively  attacked.  Further, 
the  market  often  remains  the  jjersonal 
market  of  the  agency  owner;  and  if  the 
manufacturer  at  any  time  desires  to  sell 
his  goods  direct,  or  transfer  the  agency,  he 
at  once  di.scovers  that  he  jnust  again  build 
up  a clientele.  The  customers  will  cling  to 
the  old  agency  chief  and  accept  goods  re- 
commended by  him  rather  than  the  man- 
ufacturers' j)roducts,  unless,  of  course, 
no  similar  ])roduct  is  produced  anywhere 
in  the  world.  In  addition,  it  is  not  always 
easy  to  close  with  a good  agency — some 
comj^etitor  may  already  have  made  con- 
nections. Handing  the  sales  rights  over 
to  an  agency  with  a poor  following  damns 
one’s  goods  from  the  start. 

d’he  best  arrangement  is  the  joint  estab- 
lishment by  several  non-competing  man- 
ufacturers of  an  office  at  Shanghai,  that 
12]  , 


wonderful  em{)orium  of  foreign  trade  and 
microcosm  of  western  civilization  dumped 
down  inside  the  entrance  gates  of  the  most 
conservative  people  in  the  world — the 
threshold  of  China.  Branches  may  be 
opened  at  other  ports  as  found  necessary. 
There  are  forty-eight  treaty  ports,  where 
foreigners  are  privileged  to  reside  for 
business  ])urposes  under  the  jurisdiction 
and  protection  of  the  law  courts  of  their 
resj)ective  nationalities.  The  jmincipal 
treaty  ports  in  the  order  of  their  import- 
ance, are:  Shanghai,  Tientsin,  Hankow, 
and  Canton.  These  four  treaty  ports  are 
the  centers  of  foreign  trade  activity. 

Experienced  Men 
In  selecting  a corporation  or  branch 
office  staff,  efforts  should  be  made  to  ob- 
tain men  who  have  had  Chinese  expe- 
rience, have  Chinese  friends,  understand 
their  language  and  customs,  and  have  a 
broad  general  education.  If  they  have  in 


addition  a knowledge  of  foreign  languages 
that  will  be  an  asset  of  inestimable  value. 

The  ideal  system  for  American  trade 
with  the  Orient,  and  similar  to  that  fol- 
lowed by  the  British  merchants  who  have 
proven  so  successful  in  their  trading  ven- 
tures with  the  Oriental  nations,  is  a com- 
bination buying  Oriental  produce  and 
selling  American  goods.  Such  a combina- 
tion could  be  formed  by  the  association  of 
American  manufacturers  of  non-compe- 
ting lines,  who  desire  Eastern  trade,  with 
American  manufacturers  using  Oriental 
products.  Such  an  organization  should 
consist  of  a manager,  assistants,  an  export 
department,  and  an  import  department. 
Both  the  export  and  import  departments 
should  have  trained  staffs. 

The  complete  control  of  affairs  must  be 
in  the  hands  of  the  manager  and  all  deal- 
ings with  Chinese  done  by  him,  or  by 
assistants  deputed  to  act  for  him.  Of 
course,  for  expert  advice  he  would  call  on 
his  trained  import  and  export  staffs  as 
occasion  demanded.  Terms  having  been 
. made  by  the  manager  for  either  purchases 
or  sales,  and  such  terms  having  been 
accepted  by  the  native  merchant  inter- 
ested, the  export  or  import  department, 
as  the  case  might  be,  would  arrange  for 
receipt  or  delivery,  supervise  it  to  insure 


compliance  with  contract  terms,  insure 
proper  packing,  etc. 

Such  an  organization  as  outlined  above, 
with  a manager  known  and  liked  by  the 
Chinese,  acquainted  with  their  views  of 
life,  and  conversant  with  their  language 
and  customs,  would  have  a pro.sperous 
existence,  especially  if  its  compradore  be 
prominent  in  the  mercantile  community. 

Importance  of  Trade  AIarks 

The  manner  in  which  goods  are  wrapped 
or  marked  plays  a most  important  part 
with  the  average  Chinaman.  He  has 
centain  symbols  which  he  considers  un- 
lucky, and  if  you  have  a box  of  matches  or 
bottle  of  perfume  or  any  other  article 
“unluckily”  branded  he  cannot  be  per- 
suaded to  accept  it  even  as  a gift.  Simi- 
larly, there  are  many  subjects  which  he 
considers  lucky,  and  he  exhibits  a marked 
weakness  for  certain  colors,  being  willing 
to  purchase  the  goods  bearing  these  lucky 
emblems  and  favorite  colors  whether  he 
is  very  much  in  need  of  the  articles  or  not. 
In  a country  where  every  bird  has  its 
heraldic  station  firmly  fixed,  and  where 
every  natural  object  possesses  a symbolic 
meaning,  the  selection  of  an  appropriate 
trade  mark  must  be  the  work  of  one  who 
has  an  intimate  knowledge  of  the  country. 


Copyrighted  by  Newman  Traveltalks  and  Brown  & Dawson,  N.  Y. 


On  the  Yangtse  Kiang  at  Hankoio 


[13 


Copyrighted  by  E.  M.  Newman 

Chinese  salt  junks  on  the  Yangtse  Kiang 


Of  inmiense  importance  in  the  Chinese 
trade  are  the  questions  of  trade-marks — 
called  “chops”  in  China — , packing,  and 
advertising. 

The  natives  who  eventually  consume 
the  foreign  traders’  products  are,  to  a 
great  extent,  illiterate.  In  purchasing  their 
needs  they  invariably  call  for  “Gold  Fish,” 
“Cloth,”  “8  Fairies  Oil,”  “White  Horse 
Dye,”  etc.  rather  than  “Smith  and  Jones 
Cotton  Sheeting,”  “Watson’s  Oil,”  or 
“Williams  Dye.”  They  identify  an  article 
by  its  label  (“chop”)  and  any  commod- 
ity’s quality  is  made  known  through  the 
country,  from  mouth  to  mouth,  by  such 
words  as  “Gold  Fish  Cloth  wears  very 
well;”  “1  dyed  some  cloth  two  years  ago 


with  White  Horse  Dye  and  the  color  is 
still  bi’illiant etc.  The  name  of  the  manu- 
facturer is  immaterial,  being  unknown  to 
the  purchaser,  and  “chops”  are  so  valu- 
able that  foreign  merchants  are  insistently 
urging  the  Chinese  Government  to  enact 
more  stringent  legislation  against  their 
being  j)irated.  They  also  follow  up  any 
infringement  of  their  “chops,”  sometimes 
maintaining  a staff  of  speeial  employes  to 
ferret  out  eases  of  infringement.  A “chop” 
that  has  gained  a footing  insures  a con- 
tinued and  constantly  increasing  sale  of 
the  commodity  bearing  it.  Vice  versa,  a 
bad  “chop”  means  reduced  sales  and 
eventual  extinction  of  the  product  it 
covers. 


Coj)yri"hted  by  Newman  Traveltalks  and  Brown  & Dawson,  N.  Y. 

One  of  the  mining  towns  on  the  Yangtse  Kiang,  in  the  center  of  the  iron  and  coalfields 


14] 


In  the  past  there  have,  not  infrequently, 
been  cases  where  American  merchants 
have  received  good  orders  from  Chinese 
merchants  and,  though  the  goods  supplied 
were  of  high  quality,  have  failed  to  obtain 
further  orders  because  of  the  bad  condi- 
tion in  which  the  goods  reached  the  pur- 
chaser. Cases  arrived  broken — sometimes 
barely  clinging  together — articles  were 
damaged,  etc.  The  American  trader  had 
packed  the  goods  as  he  packed  for  his 
domestic  trade,  overlooking  the  fact  that 
transshipment  from  train  to  steamer, 
landing  from  steamer,  and  transport  to 
destination  in  China  (perhaps  by  native 
boat,  wheel-barrow,  or  porter)  demanded 
stronger  and  more  careful  packing. 

It  should  be  the  policy  of  American 
merchants  to  err  on  the  side  of  making 
their  packing  too  solid  rather  than  the 
contrary.  Large  cases  (say  2}/^  ft.  by  2)^ 
ft.  by  4 ft.)  should  be  of  ^ inch  board  for 
the  sides  and  1 inch  for  the  ends,  bound 
around  the  ends — and  perhaps  the  middle 
— with  hoop  iron.  The  ends  should  further 
be  strengthened  by  strips  4 by  ^ inches 


nailed  on  the  outside  iu  the  form  of  a 
frame,  thus  making  the  ends,  where  the 
side  boards  of  the  case  are  attached, 
inches  thick.  The  sides  of  the  case  should 
be  just  flush  with  this  outside  frame.  The 
stock  used  should  be  good  pine  and  not 
old  discarded  lumber. 

Piece  goods  were  packed  previous  to  the 
war  in  tin-lined  cases.  Shortage  of  tin 
led  to  the  tin  lining  being  omitted,  much 
to  the  dissatisfaction  of  the  Chinese  mer- 
chants. It  is  most  probable  that  the  old 
form  of  packing  will  be  I’esumed  in  the 
near  future. 

Size  of  Cases 

The  Chinese  usually  pack  their  prod- 
ucts in  medium  sized  packages  and  bind 
two,  three,  or  more  together  with  split 
rattan  around  the  sides  and  ends  to  form 
one  package  of  any  size  desired.  It  might 
be  well  for  American  business  men  to  pack 
their  cargo  destined  for  China  in  a similar 
manner,  binding  the  packages  together, 
to  form  others  of  the  desired  size,  by 
strong  wire  around  the  ends  and  sides. 


American  compound  in  Tien  Tsin 


In  carrying  such  jjackages  to  the  interior, 
where  in  some  places  only  small  packages 
can  be  transported,  the  question  of  con- 
veyance would  be  simplified.  Of  course, 
for  certain  goods  for  which  custom  has 
decreed  a certain  form  and  size  of  case, 
such  as  piece  goods,  the  standard  package 
must  be  adhered  to.  Merchants  must, 
howe^’er,  take  special  care  that  their  pack- 
ages are  strong.  No  business  can  be  re- 
tained in  China  if  goods  are  poorly  packed. 
Let  merchants  bear  this  in  mind ! 

Extent  of  Advertising 

Advertising  is  a relatively  new  idea  in 
China  but  is  making  immense  strides 
forward.  The  British-Anierican  Tobacco 
('ompany  is  the  most  extensive  advertiser 
anti  its  posters,  electric  signs,  and  special 
bill  boards,  are  found  in  the  interior,  and 
are  scattered  along  all  the  roads  leading 
to  the  treaty  ports  where  foreigners  carry 
on  business.  Japanese  medicine  firms,  the 
American  Standard  Oil  Company,  Asiatic 
Petroleum  Company,  Singer  Sewing  Ma- 
chine Company,  and  others  also  carry  on 
an  extensive  campaign  by  posters. 

All  the  firms  mentioned  above  adver- 
[IG 


tise  extensively  in  the  Chinese  newspapers, 
and  large  native  firms  at  the  treaty  ports 
also  avail  themselves  of  this  method  of 
advancing  their  business.  Newspaper  ad- 
vertising rates  are  not  heavy. 

For  a new  firm  in  China,  newspaper 
advertising  should  be  resorted  to,  and  if 
sjiecial  articles,  such  as  soap,  toilet  goods, 
medicines,  stockings,  etc.,  are  to  be  carried, 
a special  poster  scheme  should  be  inaugu- 
rated. Posters  to  be  effective  must  be 
iiitelligilile  to  the  masses  i.  e.,  explain 
themseb  es  by  the  pictures  they  bear,  and 
draw  attention  to  the  chop  ” of  the  goods 
advertised.  The  distribution  of  Chinese 
calendars  of  glazed  paper,  of  poster  de- 
sign, is  an  excellent  and  effective  means 
of  ad\’ertising. 

Customs  and  Shipping  Documents 

Foreign  merchants  entering  the  China 
trade  almost  invariably  meet  with  diffi- 
culties because  of  their  ignorance  of  the 
Chinese  Customs  routine  and  regulations. 
Unlike  the  United  States,  China  levies 
both  an  export  and  an  import  duty.  Na- 
tive cargo  from  one  treaty  port  to  another 
treaty  port  in  China  pays  export  duty  at 


the  first  port  and  import  duty  (one-half 
export  duty)  at  the  second.  If  it  is  shipped 
abroad  within  one  year,  in  its  original 
packages,  or  in  packages  repacked  under 
Customs  supervision,  the  half  duty  is  re- 
funded. Foreign  goods  are  liable  to  one 
duty  payment  only  and  are  then  duty- 
free if  sent  to  any  treaty  port  in  China. 
If  for  the  interior,  an  additional  half  duty 
must  be  paid.  Duty  on  native  cargo  is 
assessed  according  to  rates  given  in  the 
so-called  “Export  Tariff.”  Foreign  goods 
are  covered  by  the  “Import  Tariff.” 

Customs  and  Shipping  Documents 

As  an  aid  to  those  who  anticipate  ex- 
ploiting the  Chinese  market,  a short  out- 
line of  the  Chinese  Customs  method  of 
procedure  is  given  below: 

There  are  several  forms  of  a prescribed 
type  used  by  merchants  in  their  dealings 
with  the  Customs.  They  are:  Import  Ap- 
plication, Export  x\pplication.  Re-export 
Application,  Transshipment  Application, 
Transit  Pass  Application,  Application  for 
Permission  to  Re-Pack,  Foreign  Goods 
Pass,  Foreign  Goods  Sub-Pass,  and  Native 
Goods  Pass.  All  of  them  may  be  obtained 
free  at  the  Custom  House,  with  the  excep- 
tion of  Foreign  Goods  Pass,  Foreign 
Goods  Sub-Pass,  and  Native  Goods  Pass; 
but  merchants  as  a rule  have  supplies  of 
these  forms  printed  themselves  to  save 
trouble  of  applying  for  them  at  the  Cus- 
tom House.  Foreign  Goods  Passes,  of  a 
prescribed  form,  must  be  provided  at  the 
merchant’s  expense.  They  are  sold  in 
bound  books  of  100  or  200  by  Shanghai 
printers.  Blank  Foreign  Goods  Sub- 
Passes  and  Native  Goods  Passes  are  sold 
at  the  Custom  House  in  books  of  50;  the 
price  is  nominal  and  merely  covers  their 
cost.  They  are  made  of  a special  kind  of 
paper,  similar  to  bank  check  paper,  to 
prevent  unauthorized  alterations  being 
made. 

A merchant  having  foreign  cargo  to 
import,  once  the  steamer  bearing  it  ar- 


rives in  port,  carefully  fills  in  an  Import 
Application,  attaches  his  Bill  of  Lading 
thereto  (invoice  also  if  the  goods  pay  ad 
valorem  duty),  and  sends  same  to  be  de- 
posited at  the  Import  Desk  in  the  Custom 
House.  This  application,  after  certain 
formalities  that  do  not  concern  outsiders, 
is  sent  by  the  Customs  authorities  to  the 
wharf  or  warehouse  where  the  cargo  has 
been  landed  under  Customs  supervision 
and  examination  is  effected.  Usually  an 
employee  of  the  firm  interested  is  sent  to  be 
present  at  the  examination,  but  this  is  not 
absolutely  necessary,  though  it  is  to  be 
recommended . 

Examination  completed,  the  applica- 
tion, still  in  Customs  custody,  is  returned 
to  the  Custom  House,  where  a Chinese 
“Duty  Memorandum”  is  prepared.  This 
memorandum,  indicating  duty  due,  is 
handed  to  the  merchant,  who  goes  to  the 
Customs  Bank — near  or  in  the  Custom 
House — and,  paying  the  amount  called 
for,  exchanges  it  for  a bank  receipt.  This 
bank  receipt  the  merchant  deposits  at  the 
Import  Desk.  In  a short  time,  as  soon  as 
checking  can  be  effected,  the  Bill  of  Lad- 
ing is  returned,  sealed  and  signed,  and  it 
is  valid  to  exchange  at  the  wharf  for  his 
goods.  Merchants  receive  all  documents 
from  the  Customs  at  a distribution  office 
in  the  basement  of  the  Custom  House. 
They  hand  in  documents  at  places  in- 
dicated. 

Sub-Pa.sses 

Immediately  on  receipt  of  the  sealed 
Bill  of  Lading  the  merchant  or  his  repre- 
sentative, at  the  Import  Desk,  must  make 
an  additional  copy  of  the  Import  Appli- 
cation, an  absolutely  true  copy  of  the 
document  as  it  then  appears,  fill  in  a sim- 
ilar copy  in  his  Foreign  Goods  Pass  {i.e., 
in  the  book  of  Foreign  Goods  Passes, 
which  must  be  numbered  consecutively), 
and  deposit  both  at  that  desk.  The  same 
day,  or  the  next  day  at  latest,  the  Foreign 
Goods  Pass  Book  will  be  returned  with 

[17 


the  Pass  signed  and 
sealed.  As  he  desires 
Sub  - Passes — docu- 
ments for  small  lots 
of  cargo,  given  to  the 
purchaser  as  a proof 
of  duty  payment 
and  as  certificates 
insuring  against  a 
second  levy  of  duty 
if  the  goods  are  re- 
exported to  another 
Treaty  Port,  as  they 
usually  are — he  fills  in  Foreign  Goods  Sub- 
Passes,  makes  corresponding  entries  in  the 
Foreign  Goods  Pass  Book  under  the  proper 
Pass,  and  hands  in  both  at  the  Custom 
House.  When  returned,  signed  and  sealed, 
each  Sub-Pass  is  a proof  of  duty  payment 
for  the  cargo  covered  by  it.  The  Pass  itself 
will  have  a similar  amount  written  off. 

For  native  goods  the  procedure  is  the 
same  except  that  the  Passes  are  not  bound 
in  book  form  and  Sub-Passes  are  not  is- 
sued. The  Pass  serves,  for  native  goods, 
the  same  purpose  as  do  Sub-Passes  for 
foreign  goods,  and  are  used  in  the  same 
way.  For  this  reason  merchants  usually 
make  out  from  five  to  ten  passes,  totalling 
the  entire  consignment,  when  importing 


native  goods,  rather 
than  one  pass  for  the 
entire  amount. 

For  Re-Export, 
Permit  to  Re-Pack, 
Application  for 
Transit  Pass  (docu- 
ment covering  con- 
veyance for  foreign 
goods  to  the  interior 
and  insuring  their 
exemption  from  Li- 
kin and  Native  Cus- 
toms dues  en  route)  and  Transshipment, 
the  routine  is  simple  and  calls  for  no  com- 
ment. The  documents,  stating  full  par- 
ticulars, are  deposited  at  the  desk  dealing 
with  them,  i.e..  Re-export  Desk,  Transit 
Desk,  etc.,  and  instructions  given  to  the 
merchant  save  him  from  going  wrong.  In 
thecase  of  Re-exports,however, proper  Sub- 
Passes,  in  the  case  of  foreign  goods,  and 
Passes,  in  the  case  of  Native  Goods,  must 
be  attached  to  the  application  as  a proof  of 
duty  payment  or  duty  will  be  levied  a sec- 
ond time. 

Cash  Drawbacks 

Foreign  Passes  and  Sub-Passes  are  valid 
for  three  years  for  cash  drawback,  if  cargo 


Copyrighted  by  Newm.-iii  Trnveltalk.s  and  Brown  & Dawson,  N.  Y. 


Caris  like  these  are  used  in  China  for  trajis-porting 
small  shipments  in  the  cities 


Copyrighted  by  Newman  Travelt.aiks  and  Brown  & Dawson,  N.  Y. 


The  South  Manchurian  Express.  This  is  the  finest  train  in  the  Far  East,  connecting  with  the  Trans- 
Siberian  Railway  at  Harbin.  The  appointments  of  this  train  are  not  excelled  anywhere. 

The  sleepers  are  all  in  compartments,  each  accommodating  two  persons.  There  is 
hot  and  cold  running  water  in  each  compartment. 


18] 


Copyrighted  by  Newman  Traveltalks  and  Brown  & Dawson,  N.  Y. 


Natives  traveling  fourth-class  in  China 


is  re-exported  abroad;  they  are  valid  for- 
ever for  exemption  from  further  duty  col- 
lection in  China  on  cargo  covered  by 
them.  Native  Passes  are  valid  for  one 
year,  as  a general  rule.  For  raw  silk,  tea, 
straw  braid,  feathers,  and  a few  other  arti- 
cles, they  are  good  for  a longer  period — 
eighteen  months  to  two  years. 

A Customs  rule  which  merchants  must 
never  forget  is  that  demanding  an  indivi- 
dual number,  alongside  the  mark,  on  each 
package  bearing  the  same  mark.  Without 
this  the  right  to  cash  drawbacks  is  for- 
feited. Chinese  refuse  to  buy  cargo  that 
does  not  enjoy  the  privilege  of  cash  draw- 
back— this  is  a further  reason  for  bearing 
the  foregoing  rule  in  mind. 

There  is  a great  amount  of  red  tape  in 
the  Chinese  Customs  and  merchants’  ap- 
plications are  often  held  up  because  of 
slight  clerical  slips.  Such  applications  are 
collected  at  the  Wrong  File  Desk.  When- 
ever delay  is  experienced,  it  should  be  the 
invariable  rule  for  the  merchant  to  in- 
quire at  the  Wrong  File  Desk.  He  will, 
most  probably,  find  that  some  slight  error 
has  caused  the  delay  and,  once  corrected, 
the  applications  will  be  passed  through 
smoothly. 

In  almost  all  lines  of  foreign  goods  the 


Chinese  market  is  short  of  stock.  The 
commodities  formerly  furnished  by  Ger- 
many, Austria,  and  Belgium  are  in  most 
urgent  demand.  Belgium  will,  it  is  evi- 
dent, be  in  no  position  to  resume  its  China 
trade  for  some  years  owing  to  the  destruc- 
tion of  its  mills  and  factories,  while  Ger- 
many and  Austria  will  experience  diffi- 
culty in  obtaining  raw  materials  and  will 
be  short  of  tonnage. 

Articles  Urgently  Needed 
Briefly  enumerating  the  main  items, 
the  yearly  sales  of  Austrian,  German, 
and  Belgian  products  normally  reached, 
approximately,  the  following  totals:  Iron 
and  mild  steel  bars,  17,000  tons;  iron 
and  mild  steel  cobbles  (wire  shorts), 
18,000  tons;  iron  and  mild  steel  hoops, 
1300  tons;  iron  and  mild  steel  nail 
rods,  3,000  tons;  iron  and  mild  steel 
nails  and  rivets,  3,000  tons;  railroad  rails, 
4,500  tons;  iron  and  mild  steel  sheets 
and  plates,  9,000  tons;  enamelled  ware 
(almost  entirely  Austrian),  $500,000;  win- 
dow glass,  225,000  boxes  of  100  square 
feet  each;  cotton  hosiery,  500,000  dozen 
pairs;  miscellaneous  machinery  and  ma- 
chine parts,  $700,000;  needles,  4,100,000 
mille;  paper  of  all  kinds,  14,000  tons; 
railway  materials  (other  than  ties,  loco- 

[19 


motives  or  coaches),  $500,000;  stoves, 
$100,000;  rock  candy,  3,560  tons;  tele- 
graph and  telephone  materials,  $200,000; 
tinfoil,  600  tons;  and  locomotive  and 
railway  coaches,  $1,000,000.  Aniline  dyes 
totalled  $1,000,000,  and  artificial  indigo, 
12,500  tons,  worth  $5,000,000. 

During  the  war  Japan  has  been  exerting 
every  effort  to  extend  her  markets  in 
China.  In  most  of  the  lines  mentioned 
she  has  made  great  headway,  due  pri- 
marily to  proximity  to  the  market  and 
shortage  of  tonnage  at  her  competitors’ 
disposal.  But  the  goods  supplied  have,  in 
many  instances,  not  given  entire  satisfac- 
tion and  her  present  commanding  posi- 
tion in  the  China  field  is  far  from  secure. 

New  Bank  for  Asia 

With  a view  to  active  participation  in 
the  development  first  of  the  northern  part 
of  China,  the  Asia  Banking  Corporation 
was  recently  formed  under  the  laws  of 
New  York  State  with  a capital  of  $2, ()()(),- 
000  and  a surplus  of  $500,000,  all  of  which 
has  been  paid  in.  Among  the  stockhold- 
ers of  the  new  company  are  the  Guaranty 
Trust  Company  of  New  A"ork;  the  Bank- 
ers Trust  Company;  the  Mercantile  Bank 
of  the  Americas;  the  Anglo  and  London, 
Paris  National  Bank,  of  San  Francisco; 
the  First  National  Bank,  of  Portland, 
Ore.;  and  the  National  Bank  of  Com- 
merce, of  Seattle,  Wash. 

The  Far  Eastern  territory  where  the 
Asia  Banking  Corporation  contemplates 
centering  its  activities  comprises  mainly 
the  northern  and  part  of  the  central  prov- 
inces of  China,  Manchuria,  and  Southeast- 
ern Siberia.  It  covers  an  area  of  about 
2,800,000  scpiare  miles,  with  a population 
of  ajiiiroximately  340,000,000.  Eighty  per 
cent,  of  the  foreign  trade  of  the  entire 
Chinese  nation  is  transacted  through  the 
seaports  of  this  territory. 

Mr.  David  Z.  T.  A ui,  Honorary  Secre- 
tary of  the  Commercial  Commissioners 
from  the  Republic  of  China,  addressing 
20] 


the  San  Francisco  Chamber  of  Commerce 
dnring  the  visit  of  the  Commission  to  this 
country,  said: 

In  a few  of  the  important  trade  centers  of 
China,  such  as  Shanghai,  Hankow,  Tientsin,  and 
Canton,  we  would  like  to  see  permanent  exhibits 
established  where  American  manufactured  goods 
could  be  seen,  and  experienced  men  placed  in 
charge  who  could  give  complete  information.  We 
would  tike  to  see  constantly  what  goods  you  are 
manufacturing,  and  also  the  progress  you  are 
making.  Not  only  should  you  have  these  perma- 
nent exhibits,  but  you  should  have  catalogues 
printed  in  Chinese  for  distribution,  and  officials  in 
attendance  ready  and  competent  to  impart  full 
information.  You  could  tell  us  in  what  cities  in 
America  the  various  goods  were  manufactured, 
and  the  prices  both  wholesale  and  retail.  You 
could  also  inform  us  how  you  pack  them  for  ship- 
ment, and,  after  we  have  purchased  them,  how 
best  we  can  take  care  of  them  and  procure  the 
best  results. 

In  this  connection  it  may  be  mentioned 
that  the  Japanese  in  Antimg  have  erected 
a commercial  museum  in  that  city  where 
actual  exhibits  of  Japanese  manufactured 
goods  can  be  seen  by  potential  Chinese 
purchasers,  and  where  exhibits  illustrative 
of  the  agricultural  and  mineral  products 
of  the  district  can  be  shown  to  prospec- 
tive Japanese  settlers  and  investors. 

Mr.  Yui  also  said: 

We  would  like  to  see  fleets  of  merchant  ships 
coming  and  going  between  your  great  republic 
and  ours,  carrying  your  manufactured  goods  into 
our  country,  and  returning  ladened  with  our  raw 
materials.  Another  suggestion  is  that  China  es- 
tablish in  your  countr}"  as  well  as  ours  a perma- 
ment  Bureau  of  Information.  The  countries  of 
Europe  and  Japan  send  as  their  agents  a large 
number  of  business  representatives  and  mer- 
chants to  tour  from  city  to  city  in  China.  By 
this  means,  and  through  judicious  advertising  and 
sample  exhibits  they  force  their  goods  upon  the 
attention  of  the  people,  and  thus  readily  gain  a 
market. 

American  manufacturers  should  regis- 
ter their  trade  marks  both  in  China  and 
Japan  for  goods  seeking  markets  in  China. 

What  Americans  Should  Avoid 

We  must  make  goods  that  will  please 
the  Chinaman  and  not  necessarily  our- 
selves. If  we  are  selling  print  goods,  w'e 


Branches  of  the  Asia  Banking  Corporation  are  established,  or  are  about  to  be  established, 
in  the  cities  indicated  by  the  circles 


[21 


Along  the  water  front  of  Vladivostok 


must  make  tliem  of  Chinese  designs,  even 
though  to  our  mind  our  designs  are  more 
handsome.  Many  a tale  is  told  of  Amer- 
ican obstinacy  in  the  Chinese  market.  A 
representative  of  an  Ohio  hardware  firm 
obtained  a trial  order  in  China  for  $5,000 
worth  of  screws,  on  the  condition  that 
they  be  wrapped  in  blue  paper.  The 
company  cabled  that  their  goods  were  al- 
ways "wrapped  in  brown  paper  and  that 
they  could  not  alter  their  practice.  The 
order,  perhaps  the  entering  wedge  of  an 
enormous  business,  went  to  Germany. 
The  archives  of  our  consulates  are  full  of 
similar  examples. 

Another  bad  practice  is  the  sending  of 
all  manner  of  descriptive  literature  with- 
out any  reference  to  price.  If  the  product 
is  used  in  China,  the  all  important  factor 
is  how  much  it  will  cost  the  local  importer; 
and  if  the  manufacturer’s  letter  gives  that 
information,  i.e.,  current  prices  f.  o.  b., 
American  port  and  approximate  shipping 
and  other  charges  to  the  distribution 
centers  of  Hongkong  or  Shanghai,  the 
local  merchant  is  in  a position  to  know  at 
once  if  business  is  possible. 

It  may  be  remarked  that  very  generally 
American  firms  when  stating  prices  quote 
an  f.o.b.,  Atlantie  or  Pacific  coast  port 
22] 


price.  They  should  remember  that  the 
prospective  importer  is  interested  only  in 
the  co.st  of  the  goods  delivered,  and  there- 
fore the  exporter,  whenever  possible, 
should  attempt  to  give  that  information 
as  fully  as  possible. 

It  is  useless  to  wait  for  demand  to 
stimulate  supply.  In  most  cases  the  de- 
mand must  be  created,  especially  in  such 
matters  as  installations  of  machinery  and 
industrial  undertakings. 

Incorporation  in  China  of  American 
Companies 

A bill  has  been  introduced  in  Congress 
which  provides  for  the  Federal  incorpora- 
tion of  companies  engaged  exclusively  in 
foreign  trade.  It  is  designed  to  meet  the 
needs  of  foreign  investors  who  are  be- 
wildered by  our  numerous  State  incorpo- 
ration laws.  The  advent  of  such  a law 
will  be  of  particular  importance  to  inter- 
ests incorporating  for  the  ]nir[)ose  of  es- 
tablishing large  enterprises  such  as  rail- 
ways or  other  public  utilities  abroad,  the 
capital  for  which  is  raised  in  part  in  the 
foreign  country  affected.  The  require- 
ments of  such  a corporation  will  be  that 
it  devote  itself  exclusively  to  foreign  trade, 


Copyrighted  by  Newmao  Traveltalks  and  Brown  & Dawson,  N.  Y 


The  Plaza  at  Dairen,  Manchuria 


and  that  a majority  of  the  incorporators 
and  directors  be  American  citizens. 

The  principal  object  of  this  law  is  to 
meet  the  peculiar  situation  existing  in 
China,  where  foreigners  are  limited  to 
treaty  ports  in  actual  trade  operations. 
Incorporation  in  these  ports  is  usually 
effected  under  the  laws  of  the  predomi- 
nant nationality,  although  it  is  permissi- 
ble for  corporations  whose  capital  and 
personnel  are  of  one  nationality  to  in- 
corporate under  the  laws  of  another  na- 
tion. Many  American  companies  there- 
fore incorporate  under  the  Hongkong 
Corporation  Act, — a very  liberal  law  in- 
volving only  a nominal  stock  tax.  One 
objection  raised  against  this  practice  has 
been  that  American-manned  and  Ameri- 
can-financed companies  must  transact 
their  legal  business  in  British  courts,  and 
must  look  to  British  officials  for  diplo- 
matic support. 

No  present  American  State  incorpora- 
tion law  meets  the  requirements  of  China, 
and  it  is  an  unfortunate  fact  that  the 
Chinese  rather  distrust  our  State  charters. 


The  Chinese  would,  on  the  other  hand, 
welcome  companies  operating  under  a 
charter  granted  by  our  Federal  govern- 
ment, and  good  enterprises  incorporated 
in  this  manner  might  find  it  much  easier 
than  in  the  past  to  raise  additional  capital 
in  China  for  the  furtherance  of  their  plans. 

Combinations  Successful  in  China 

Before  the  war  German  and  British 
engineering  combinations  were  highly  suc- 
cessful in  China,  and  in  three  years  se- 
cured engineering  contracts  in  that  coun- 
try valued  at  $450,000,000.  One  German 
combination  included  forty-seven  engin- 
eering firms,  in  addition  to  Krupps,  and 
there  were  also  represented  in  the  organi- 
zation two  shipping  houses,  one  marine 
insurance  firm,  one  life  insurance  com- 
pany, and  one  fire  and  building  insurance 
company.  The  combination  had  branches 
with  one  or  more  Chinese,  who  spoke  Ger- 
man, in  charge  at  all  important  Chinese 
cities. 

While  American  manufacturers  were 
endeavoring  to  sell  their  products  individ- 

[23 


ually,  the  Germans  began  by  saving  the 
Chinese  trouble.  Thus,  if  there  was  a 
mining  venture,  the  representative  of  the 
allied  German  manufacturers  would  go  to 
the  local  governors  or  parties  interested 
and  offer  to  take  the  whole  job,  i.e.,  sink 
the  shafts,  develop  the  mines,  put  in  all 
the  equipment,  build  the  railways  or  boat 
lines,  erect  power  plants  and  equip  them, 
put  up  workmen’s  dwellings,  and  finance 
the  undertaking.  Such  an  organization  was 
prepared  to  sell  a Chinaman  a five-cent 
handsaw  or  develop  an  entire  province. 

The  Anglo-Chinese  Engineers  Associa- 
tion is  a similar  organization,  made  up  of 
a strictly  non-competing  group  of  75  con- 
cerns making  machinery,  railway  supplies, 
engineering  material,  and  tools.  This  or- 
ganization has  branch  houses  in  charge  of 
Chinese  speaking  European  assistants  at 
selected  ports  and  industrial  centers,  with 
a managing  director  in  Peking.  In  large 
cities  such  as  Peking,  Hankow,  and  Can- 
ton it  has  competent  mechanical  engi- 
neers with  Chinese  experience,  while  the 
selling  staff  includes  men  with  intimate 
knowledge  of  the  localities  in  which  they 
are  employed. 

“Slow  Siege”  the  Better  Plan 

American  goods  will  sell  in  China  if  they 
are  given  equal  opportunity  with  the  out- 
put of  other  nations.  The  American  com- 
munity in  Shanghai  has  more  than  dou- 
bled in  the  last  few  years,  and  there  is  a 


larger  variety  of  American  goods  visible 
in  the  shops  than  before.  But  the  na- 
tional fault  of  Americans  in  their  attempt 
to  secure  foreign  trade  is  impatience.  In 
the  domestic  market  we  are  accustomed 
to  capture  trade  by  rapid  advances,  by 
brilliant  assaults.  In  the  foreign  field,  and 
especially  in  China,  the  slow  siege  is  the 
better  plan. 

Dr.  Wu  Ting  Fang,  former  Minister 
to  the  United  States,  remarked  upon  this. 
He  said: 

An  American  is  apt  to  be  in  too  much  of  a 
hurry.  He  should  make  up  his  mind  that  if  he 
has  an  article  that  the  Chinese  want,  they  will 
buy  it  eventually,  but  that  it  will  take  a little 
longer  to  introduce  his  goods  in  China  than  in  the 
United  States;  but  he  should  also  remember  that 
once  he  gets  his  article  established  it  will  continue 
to  sell  for  a long  time,  and  indeed  will  never  be 
displaced  until  another  article  of  the  same  kind, 
but  of  conspicuously  higher  merit,  and  cheaper, 
is  introduced. 

The  Chinese  nature  is  not  much  different 
from  that  of  other  human  beings.  What  at  first 
is  a luxury  soon  becomes  a necessity  in  China,  as 
elsewhere.  I have  seen  this  demonstrated  in 
Shanghai.  A young  merchant  from  the  interior 
comes  to  Shanghai  for  the  first  time.  He  is  taken 
about  and  entertained  by  the  local  merchants. 
He  is  introduced  to  some  of  the  delights  of  the 
modern  civilization.  After  that  he  is  never  the 
same  man.  He  longs  for  luxury  once  he  has 
tasted  it.  He  likes  the  cigarettes;  he  hkes  the 
scented  soaps,  the  wines,  the  perfumery,  foreign 
clothes,  automobiles,  upholstered  furniture.  It 
is  largely  beyond  his  reach  because  of  its  cost,  but 
as  he  begins  to  feel  better  financially  he  adds  to 
his  stock  of  foreign  introduced  luxuries,  and  en- 
joys them. 


24] 


